Often, the media discusses the issue of high CEO pay, but what about high pay for members of the board? More than a dozen public company boards had directors whose compensation averaged more than $500,000 in 2011. That is greater than the compensation of some S&P 500 CEOs — CEOs who work full-time while board members do not.

Can these directors really be worth so much to the companies they govern? 24/7 Wall St. examined the issue and found that many of these highly paid boards share several traits, offering a clue to what differentiates them from boards that are paid modestly.

The debate over board governance practices and the value of boards as an important part of large company management has been prominent in the news recently. A multibillion trade at JP Morgan (NYSE: JPM) raised the question of whether board risk-management practices are effective at this and other banks.

The CEO of Chesapeake Energy (NYSE: CHK), Aubrey McClendon, took out hundreds of millions of dollars in loans to buy into many of the company’s drilling operations. McClendon stood to make several times his annual compensation if these investments paid off. The board of Chesapeake did not question this conflict — a decision that contributed to the board’s restructuring by outside investors, including corporate raider Carl Icahn. At least five current Chesapeake directors lost their positions. Coincidentally, the Chesapeake board pay level is high enough to make this 24/7 Wall St. list.

Many of the boards on this list govern corporations in which the current CEO is also the founder, including Amazon.com (NASDAQ: AMZN), Oracle (NASDAQ: ORCL), Chesapeake Energy and Salesforce.com (NYSE: CRM). At Tyson Foods (NYSE: TSN), the CEO and directors are members of the founding family. So it could be that CEOs who control their companies’ management also control their boards and how these boards are treated.

In many other cases, the companies on this list have one board member who received an extremely large compensation in 2011. Often, these are former CEOs or other high-ranking executives who now serve as chairman, do part-time consulting work with their former employer or both.

However, just because a company pays its board a lot does not necessarily mean it is excelling financially. Of the top 12 companies, six have lower stock prices compared to two years ago (as of June 4). Seven of the companies had lower profits in 2011 compared to the year earlier.

In order to identify the highest-paid boards of directors, 24/7 Wall St. relied on a special screen generated by GMI Ratings, a corporate governance ratings firm. GMI ranked the top 50 companies with the highest average board of director compensation. The screen also included the number of directors, the company’s position in Fortune 500 and whether the company is on the Russell 1000 and/or S&P 500 stock indices.

24/7 Wall St. then took the compensation of the top 12 companies, verified the company data through their proxy statements, vetted directors who deviated from the trends and considered director backgrounds to gain insight into pay practices. We also noted each companies’ change in share price over the past two years, along with the net earnings in 2010 and 2011.

These are the 12 companies with the highest-paid board of directors.

12. Chesapeake Energy
> Average Compensation: $533,163
> 2-Year Stock Change: -26.05%
> Net Earnings FY 2011: -$28 million
> Net Earnings FY 2010: $472 million

It has been a rough go for Chesapeake Energy. The company lost $28 million in 2011. The company continues to flounder following the reports that in the past three years CEO Aubrey McClendon took out more than $1 billion in loans using his stake in the company’s wells as collateral. This raised a host of questions regarding conflict of interest and corporate governance. Nevertheless, all but two directors were paid more than $500,000 during 2011.

After intense pressure from shareholders, the board will soon be revamped. The Oklahoma City-based company announced Monday that four of the eight nonexecutive board members will resign later this month and be replaced by a new slate of directors selected by the company’s two largest shareholders, Southeastern Asset Management and Carl Icahn. McClendon also will step down from his role as chairman, and a new independent director will take his place.

11. Freeport-McMoRan Copper & Gold
> Average Compensation: $541,836
> 2-Year Stock Change: -7.68%
> Net Earnings FY 2011: $4.56 billion
> Net Earnings FY 2010: $4.34 billion

Although Freeport-McMoRan (NYSE: FCX) had no one who deviated tenfold from the median pay, Vice Chairman B. M. Rankin, cofounder of the company, managed to rake in $1,274,903 in 2011. Unlike other directors, the 82-year old former executive was paid $816,000 in consulting fees, although the specifics of his consulting contract were not disclosed.

Even without Rankin’s hefty director pay, the members of the board are still handsomely paid, even though the company share price has sagged. The lowest-paid director, former KPMG CEO Jon Madonna, still received $418,403 in 2011.

10. Tyson Foods
> Average Compensation: $542,013
> 2-Year Stock Change: +5.75%
> Net Earnings FY 2011: $750 million
> Net Earnings FY 2010: $780 million

At Tyson Foods, the average board member compensation was significantly skewed because of the payments to John and Don Tyson. John Tyson, the current chairman, was paid $3,295,168 in 2011. In return for working up to 20 hours a month, he is entitled to $500,000 in cash annually through a consulting contract until Oct. 2020. The other payments included health care and pension payments, use of the company aircraft and security services, among other expenses.

Meanwhile, John Tyson’s father, Don Tyson, received a pay package of $1,274,588 in 2011. This included cash compensation, use of the company-owned aircraft, life insurance premiums, tax reimbursement and tax and estate planning. Following Don Tyson’s death in January 2011, the cash compensation portion of $319,048 will be paid to his three surviving children.

9. Alpha Natural Resources
> Average Compensation: $549,445
> 2-Year Stock Change: -73.65%
> Net Earnings FY 2011: -$677.39 million
> Net Earnings FY 2010: $95.55 million

Alpha Natural Resources (NYSE: ANR) is the result of two mergers: one with Foundation Coal in 2009 and the other with Massey Energy in 2011. The mergers resulted in a host of executive and director changes.

The average director compensation is high because Michael Quillen, the former CEO of Alpha, was paid out $2,610,776 in 2011 as part of an outpayment agreement following the Foundation Coal merger. Once Quillen ended his service as Alpha’s CEO in July 2009, he became entitled to certain benefits for up to 24 months after termination. Since this deal ended last year, Alpha probably will not make next year’s list.

8. Ball
> Average Compensation: $563,954
> 2-Year Stock Change: +60.6%
> Net Earnings FY 2011: $444 million
> Net Earnings FY 2010: $468 million

The former CEO of Ball Corporation (NYSE: BLL), R. David Hoover, was paid both for both his services to the day-to-day operations and to the board. Hoover, who retired as CEO in Jan. 2011, continued to serve as chairman. He was paid $3,532,234 in 2011. The company’s proxy statement also indicated that he received payment for Jan. 2011, when he was still CEO. Other company directors earned between $200,000 and $300,000 in 2011.

7. Occidental Petroleum
> Average Compensation:$645,242
> 2-Year Stock Change: -2.85%
> Net Earnings FY 2011: $6.64 billion
> Net Earnings FY 2010: $4.59 billion

For years, former Occidental Petroleum (NYSE: OXY) CEO Ray Irani was one of the highest-paid CEOs in the United States, garnering approximately $857 million between 2000 and 2010, according to a 2010 analysis by the Wall Street Journal. Irani may have been pushed out as CEO and to the chairman post, but his pay package remained large. The highest-paid director at Occidental was Aziz Syriani, who made $1,052,265 in 2011. He has served on the board longer than Irani, joining in 1983.

The average could have been significantly higher, but John Chalsty (joined in 1996) and Irvin Maloney (joined in 1994) only served as directors until the annual shareholder meeting in June 2011. They were only paid $65,151 and $29,908 that year, respectively.

6. Salesforce.com
> Average Compensation: $690,053
> 2-Year Stock Change: +51.65%
> Net Earnings FY 2011: $64.5 million
> Net Earnings FY 2010: $80.7 million

Compared to some companies on this list, Salesforce.com is a rather small company, generating less than $2.3 billion in revenue for 2011. Nevertheless, the company shelled out nearly $700,000 on average to its directors last year.

Founder and CEO Marc Benioff left Oracle, which shows up later on this list, to start Salesforce.com in 1999. He currently owns 7.8% of the common stock, giving him a fair amount of clout to determine the shape and remuneration of the board. Another connection to another company on this list is Lawrence Tomlinson, who has served as a director since May 2003. Tomlinson retired from Hewlett-Packard (NYSE: HPQ) in June of that year.

5. Northrop Grumman
> Average Compensation: $696,717
> 2-Year Stock Change: -5.59%
> Net Earnings FY 2011: $2.12 billion
> Net Earnings FY 2010: $2.05 billion

Unlike many other companies on the list, the outlier at Northrop Grumman (NYSE: NOC) is not a current or former executive. Rather, the average compensation figure is skewed because of the compensation of the lead independent director, Lewis Coleman, who was paid $5,652,356 in 2011. Most of his payment was not in cash or stock. The company shelled out a whopping $5,203,559 in costs “related to security protection related to Mr. Coleman.” This included $1,515,536 for “personal and family member travel on company aircraft” and a $174,953 “tax-gross up.” That’s a pretty good deal, given that he probably gets paid a pretty penny to serve as president and chief financial officer of DreamWorks Animation (NASDAQ: DWA).

4. Oracle
> Average Compensation: $725,589
> 2-Year Stock Change: +16.08%
> Net Earnings FY 2011: $8.55 billion
> Net Earnings FY 2010: $6.14 billion

Oracle’s cofounder and CEO, Larry Ellison, has significant power to shape the board due to his large ownership of common stock (22.4%). Donald Lucas, the highest paid-director, made $1,023,231 from Oracle in fiscal year 2011. He has served on the board of directors since March 1980. He was chairman of the board from Oct. 1980 through May 1990, and served as chairman of the executive committee from Dec. 1985 through June 2008, when the position was eliminated. Oracle has a board beefed up with insiders. The chairman is a former CFO, and both co-presidents, including former HP CEO Mark Hurd, serve on the board.

3. Fidelity National Information Services
> Average Compensation: $849,691
> 2-Year Stock Change: +13.52%
> Net Earnings FY 2011: $469.6 million
> Net Earnings FY 2010: $404.5 million

Fidelity National Information Services (NYSE: FIS), is the surviving entity of a 2005 merger between Certegy and Fidelity National Financial, or “Old Fidelity.” The board is composed of members from both Old Fidelity and Certegy.

The clear outlier in this case is William Foley, who made $3,488,791. He is currently the vice chairman of the board and was executive chairman of the board until Feb. 2011 and chairman until March 2012. Still, even without Foley in the mix, the average director compensation would be well over $300,000, a sizable pay package for a part-time job.

2. Amazon.com
> Average Compensation: $898,993
> 2-Year Stock Change: +71.03%
> Net Earnings FY 2011: $631 million
> Net Earnings FY 2010: $1.15 billion

The CEO and founder of Amazon, Jeff Bezos, is also its largest shareholder (19.5% of common stock), which gives him considerable leeway in determining the compensation of the board members. Amazon directors are not paid in cash but do receive restricted stock and options awards exclusively, which is unusual for a publicly traded company.

Three independent directors did not receive compensation for their board services in 2011: John Seely Brown, Alain Monie and Jonathan Rubinstein. However, Brown and Monie received 3,600 restricted shares in Feb. 2012. Meanwhile, Rubinstein was the only director paid in 2010, receiving $883,350. The only paid director not to receive $927,100 was Blake Kirkorian, who joined the board of directors in Sept. 2011. He was paid $786,564.

1. Hewlett-Packard
> Average Compensation: $941,802
> 2-Year Stock Change: -54.23%
> Net Earnings FY 2011: $7.07 billion
> Net Earnings FY 2010: $8.76 billion

Hewlett-Packard is an unlikely company to be at the top of companies with highest-board pay. HP shares plummeted more than 50% in the past two years. Part of the company’s woes stem from a decline in demand for many of HP’s products, notably its PCs. Furthermore, the company has struggled to keep a permanent slate of executive and board members. Former HP CEO Mark Hurd was fired in Aug. 2010, following discrepancies in his expense accounts. Former CEO Leo Apotheker served less than a year in his position before being terminated by the board in Sept. 2011.

Board members have shifted just as quickly as the CEOs have. Four members resigned shortly after the Hurd scandal, while directors Lawrence Babbio and Sari Baldauf both departed earlier this year. The average compensation is greatly inflated due to Executive Chairman Ray Lane’s payment of $10,648,366 in fiscal year 2011.

Douglas A. McIntyre and Samuel Weigley

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